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PwC says domestic tax reform will help solve BEPS

Tax

A 5.0 per cent drop in the company tax rate, with an increase in indirect taxes to keep budget revenue neutral, could increase GDP by as much as 6.3 per cent, according to PwC modelling.

By Staff Reporter 8 minute read

Managing partner, tax and legal Tom Seymour said ensuring the tax system collects revenue in the most efficient way will make Australia more competitive and attract more business and trade to Australian shores.

"This is the bigger picture on base erosion and profit shifting (BEPS).

“Instead of redistributing the pie, let’s grow the pie for all Australians.

"Tax competition between countries will always exist as nations will always fight to attract capital and jobs," Mr Seymour said.

Mr Seymour released the modelling at a BEPS debate, which included OECD director Pascal Saint-Amans, World Vision chief executive Tim Costello and Australian Taxation Office commissioner Chris Jordan in Sydney yesterday.

“The OECD BEPS reform agenda is vital to encouraging greater transparency and modernisation of the international tax system,” Mr Seymour said.

“We encourage all nations to apply their recommendations and help grow the global economy and build trust in the tax system.”

The PwC modelling is based on previous OECD findings of a two per cent long-term gain in GDP from a one per cent revenue base shift away from company tax to indirect taxes.

“We are mindful a company tax reduction must be part of a total tax reform package which delivers sufficient revenue to support government services, provides equity and encourages economic growth,” said Mr Seymour.

“That’s why tax reform must deliver a grand bargain between all facets of society including unions, civil society and the wider community that underpins our future prosperity.

“We welcome the Tax Reform White Paper process expected to begin at the end of the year, and the commitment from Treasurer Joe Hockey that all facets of tax, from stamp duty to GST, are on the table,” Mr Seymour said.

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